■Summary

Daiki Axis ＜4245＞ has three main pillars: “environmental equipment-related business” centered on septic tanks and wastewater treatment systems, “housing equipment-related business,” which is its ancestor business, and “renewable energy-related business,” which has been segmented since the 2018/12 fiscal year. “Protect the environment. Change the future.” Under this mission, they are aiming for ESG management, and above all, they have promoted SDGs “safe water and toilets around the world” related to the water environment from a global perspective using “water axis (axis),” which is the origin of the company name. The idea is to aim to be the top of the industry in the medium-sized water treatment field in Asia and Africa, where markets are developing in the future, and aim for a major breakthrough in emerging countries. From 2024/1, Mr. Hiroshi Ogame (Hiroshi Ogame), the former president and CEO, took office as Chairman and CEO, and Mr. Hiroki Ogame (Ogame Hiroki), who has led overseas business until now, took office as CEO and CEO, respectively, and it became a joint CEO system. Under the new system, we will increase the speed of overseas expansion and raise the growth gear.

1. Summary of financial results for the first half of the fiscal year ending 2024/12

Consolidated financial results for the first half of the fiscal year ending 2024/12 showed an increase in sales of 22610 million yen, up 7.3% from the same period last year, and operating profit of 554 million yen, up 67.7% from the same period last year. As for sales, the three businesses grew in a balanced manner, including the effects of the two companies' new consolidation. In the “environmental equipment related business,” repair work increased due to a recovery in capital investment demand, and the accumulation of maintenance contracts contributed to an increase in sales. Also, the overseas business we are focusing on has grown significantly. Regarding the “housing equipment-related business,” housing division construction was greatly raised due to steady sales to construction-related companies, etc. such as metropolitan area condominiums, etc., and the consolidated effects (including synergy) of Adore System Co., Ltd., which handles air conditioning construction. As for “renewable energy-related businesses,” the solar power generation business (sales of electricity, sales of power generation facilities) has steadily expanded, including the consolidated effects of Medea Co., Ltd. On the profit side, there was a significant increase in profit due to progress in price transfer due to price increases in purchase prices, accumulation of stock earnings, creation of synergy with subsidiaries that were M&A in the previous fiscal year, and profit and loss improvements in overseas businesses.

2. Earnings forecast for the fiscal year ending 2024/12

The consolidated earnings forecast for the fiscal year ending 2024/12 leaves the initial forecast unchanged, and anticipates an increase in sales of 44500 million yen, a 4.3% increase from the previous fiscal year, and an increase in sales and profit of 730 million yen, an increase of 10.5% from the same period. As for sales, it is expected that each of the three businesses will continue to secure an increase in sales. In the “environmental equipment related business,” overseas business has grown significantly, mainly in India and Sri Lanka, where the operation of new plants is in full swing, and for “housing equipment-related businesses,” it is expected that responses to remodeling market expansion and growth in housing equipment sector construction will drive business results. In the “renewable energy-related business,” in addition to stable revenue from electricity sales, sales are expected to increase due to new developments in biodiesel fuel-related businesses and sales of solar power generation facilities. In terms of profit, in addition to raising the bottom of earnings due to an increase in sales, the idea is to improve operating profit margins by proceeding with the transfer of the increase in purchase prices to sales prices.

3. Future direction

The company is promoting a 5-year medium-term management plan with the fiscal year ending 2025/12 as the final year, and is working on IT promotion that supports six growth strategies, such as overseas expansion and stock business expansion, and their foundation. In particular, expansion into emerging countries where there is an urgent need for water infrastructure development is expected to drive future growth in business performance, and the idea is to achieve sustainable growth for the company by contributing to the creation of a sustainable environment and society.

■Key Points

・In the first half of the fiscal year ending 2024/12, the three businesses grew in a balanced manner, and sales and profits increased

・In addition to the effects of the two companies' new consolidation, the expansion of overseas business and price transfer of increases in purchase prices also contributed to the increase in business performance

・The initial forecast for the fiscal year ending 2024/12 remains unchanged, and an increase in sales and profit is expected

・Promote a medium-term management plan with the fiscal year ending 2025/12 as the final year. Policies to accelerate overseas expansion to resolve social issues related to the water environment

(Written by FISCO Visiting Analyst Ikuo Shibata)